The Rafale deal has been caught in a controversy with the opposition Congress alleging that the price being paid by the government to purchase 36 fighter jets is more that what it had negotiated for

The government on Monday denied any joint venture agreement (JVA) had been signed between public sector defence firm Hindustan Aeronautics Limited (HAL) and Dassault Aviation under the MMRCA deal for 126 Rafale fighter jets from France. It also denied that the old deal cost India $10.2 billion, stating that it was never finalised.

In a written reply to the Rajya Sabha, minister of state for defence Subhash Bhamre said: “Due to the inability of the government to conclude negotiations and sign the contract, there was no such agreement between Dassault Aviation and Hindustan Aeronautics Limited or any other Public Sector Undertaking (PSU).”

He was replying to a question by Congress MP Vivek K. Tankha if a “JVA regarding Rafale Jet was signed between its developer, Dassault Aviation, and HAL, and was subsequently annulled”.

The minister added that “the quantum of offsets in the Inter-Governmental Agreement (IGA) for 36 Rafale fighter jets is 50 per cent, which includes investments in terms of Transfer of Technology (ToT) for manufacture and maintenance of eligible products and services.

“The current offsets policy of the Defence Procurement permits the vendors to provide details of their Indian Offset Partners (IOP) either at the time of seeking offset credits or one year prior to discharge of offset obligations. Vendor/Original Equipment Manufacturers (OEM) is free to select his Indian Offset Partner,” Bhamre said.

Meanwhile, in another written question, Tankha asked if the UPA government had “negotiated a $10.2 billion deal for acquiring 126 Rafale Jets, whereas the present government has finalised the purchase of 36 Rafale Jets for $8.7 billion, without the provision for transfer of technology”.

Bhamre in his reply said: “It had not been possible to finalise the terms and condition for acquiring 126 aircraft even after protracted process from the period of issue of a Request for Proposal (RFP) in 2007 to unsuccessful commercial negotiations up to 2014.”

“Further, there was only license manufacturing involved for 108 aircrafts for manufacture in India. As such, the terms and conditions between the earlier exercise to procure 126 aircraft and procurement of 36 Rafale aircraft in direct fly-away condition including cost per aircraft cannot be compared. Further, acquiring Transfer of Technology (ToT) for only 36 aircraft would not have been cost effective,” he contended.

He also denied any price escalation.

“It is not correct to say that there was an upward price escalation as no price was finalised,” Bhamre said.

The Congress party has alleged irregularitiesin the deal for buying 36 Rafale fighter jets off-the-shelf from France, signed between the Indian and French governments. It has also alleged that the fighter jets are being bought at a price higher than what was negotiated in the previous multi-role combat aircraft (MMRCA) deal under which 126 fighter jets were to be bought, and included a number of fighters being assembled in India.

The government has meanwhile maintained that the price India is getting under the IGA is lower than in the UPA deal, and has refused to reveal the price citing a confidentiality clause.